If you are of the mind that Bitcoin could replace or equate to gold, it makes sense to hold a portion of whatever you allocate to gold in Bitcoin. The natural ratio is
Bitcoin market cap/gold market cap
Right now, that’s around 685 Billion/9 Trillion (estimated) which yields around 7% to 8%. This ensures if you hold 8% in Bitcoin and it grows to replace gold, you will have preserved your wealth.
However, notice what this means: As Bitcoin market gap grows, you have to allocate a larger and larger percentage towards it. This could certainly create a run. So, savvy investors are more likely to allocate a larger percentage sooner then later.
The author is passionate about markets. He has developed top ranked futures strategies. His core focus is (1) applying machine learning and developing systematic strategies, and (2) solving the toughest problems of discretionary trading by applying quantitative tools, machine learning, and performance discipline. You can contact the author at email@example.com.
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